Recent past has seen reduction in oil and petroleum prices that alarmed the countries depending solely or heavily on oil & gas. These nations started taking measures to minimize the eminent effects of this change on their economies. UAE is one among these countries. Apart from diversification of its economy (Dubai is already hub of business and tourism), UAE also decided to implement value added tax (VAT) from 1st January 2018. Now it seems these precautionary measures will prove fruitful as the prices are also improving for oil sector.
According to recent research by Analysts BMI, the economic condition of UAE will improve in coming years and it will regain budget surplus by 2019. Currently, the projected budget deficit of UAE in 2017 is 1.6% that is expected to reduce by 0.7% in the next year 2018. The continuous economic growth will take UAE back to its surplus budget spree in 2019.
This expected growth of budget is dependent on two factors. The first one is the restoration of oil prices in international market along with the precautionary measures taken by UAE government especially the upcoming VAT in 2018. Higher oil prices are especially important for Abu Dhabi. Despite taking several business and tourism friendly steps, the largest emirate of UAE is still highly dependent on oil and petroleum exports.
The BMI further added that implementation of various taxes will increase growth of sectors other than hydrocarbon. Previously, sin tax was laid on tobacco products, energy and soft drinks this year while the 5% VAT will be implemented on various goods and services from 1st January 2018. VAT will play important role in UAE’s economy due to large retail activity and consumer base in the country. Apart from that, UAE has already taken necessary actions on reducing its spending. Subsidies on water, electricity and fuel have been cut down in 2015.
Even after 2019, the projects like Expo 2020 in Dubai are also expected to enhance economic growth of UAE in the near future.
This projection by a reputed international research firm will provide satisfaction for investors around the world who were skeptical about the economic condition of UAE after oil and petroleum price fall. It is evident that the UAE government is heading towards right path for growth of its economy and the business opportunities for entrepreneurs will increase in coming years. In you want to take full advantage of one of the world’s best and fastest growing economies then we at Riz & Mona Consultancy can support you. We are providing complete assistance in setting up businesses in Dubai and all the other emirates of UAE since past several years. You can contact us via our landline # 971-56-9971225.